NEW YORK--(EON: Enhanced Online News)--A new report
provides investors with a breakthrough roadmap for measuring the
effectiveness of system-level investing strategies, including measuring
progress toward achieving the United Nations’ Sustainable Development
Goals (SDGs).

“That is one reason for the
groundswell in investor interest in the sustainable development goals.
This report suggests how to go beyond aligning investment strategy with
the SDGs and how to actually measure an investor’s ability to impact
systemic risk issues.”

The new report, Measuring
Effectiveness: Roadmap to Assessing System-level and SDG Investing,
examines how investors can chart a course to assess system-level
issues (like those contained in the SDGs) appropriate for their specific
situation, and then establish effective goals for influence against
which to measure progress. In doing so, investors also can assess the
potential usefulness of the tools available to them and the
effectiveness of the tools they have selected. Ultimately, this approach
enables investors to assess their influence in determining changes at
the system-level itself and the potential contribution of their efforts
and investments.

The report is authored by William Burckart, Steve Lydenberg and Jessica
Ziegler of The Investment Integration Project (TIIP)
and was sponsored by the Investor Responsibility Research Center
Institute (IRRCi).

A companion document to the report, Measuring Effectiveness: Roadmap
to Assessing System-level and SDG Investing—Supplemental Appendices,
contains a series of appendices that provide tools and examples for
investors, as well as additional context for and information about the
concepts discussed.

A webinar is scheduled for Monday, March 26, 2018, at 1:00 PM ET to
review the findings and respond to questions.

“Investors increasingly realize that mitigating systemic risk is far
more important to their returns over time than any trading strategy,”
explained Jon
Lukomnik, IRRCi executive director. “That is one reason for the
groundswell in investor interest in the sustainable development goals.
This report suggests how to go beyond aligning investment strategy with
the SDGs and how to actually measure an investor’s ability to impact
systemic risk issues.”

“Central to the findings of this report is that investors now can
measure whether individual organizations are using system-level
investing strategies in ways that can lead to collaborative action and
influence,” said report co-author William
Burckart. “Ultimately, it is through the collective actions of a
diverse set of members of the investment community using a variety of
tools in differing ways that sufficient leverage can be achieved to
exercise influence within today’s complex, global, interconnected
systems.”

“Measuring the effectiveness of system-level investing is possible; it
is the foundation upon which investors can base consistent, system-wide
impact over time and protect the ability of their funds to generate
returns in the long term. To paraphrase the business management pioneer
Peter Drucker, the only way investors will be able to effectively manage
the wealth-creating potential of these systems is if they measure their
influence on them,” Burckart observed.

To help facilitate investors’ use of the roadmap, the report uses an
example of climate change, and outlines how investors or third-party
evaluators can use the guidance to assess the effectiveness of actions
targeted at addressing that key system-level challenge.

Among the key findings in the report is the identification of four
foundational characteristics of environmental, societal and financial
systems. Investor actions which strengthen any of those four
characteristics mitigates systemic risk, while investor actions which
weaken any of those four will increase systemic risks.

Adaptability: the environment, society, or the financial
system’s ability to adjust to shocks and major disruptions (i.e., high
adaptability, or self-regulation, helps systems better adjust to
unanticipated external shocks).

Clarity: the coherence, flow, access to, and transparency of
information about and within a system (i.e., information flows among
actors and about system components—and their interrelationships—
enables investors’ ability to understand their influence and act
accordingly).

Connectivity: the value of a good or service is determined in
part by how many people use it. The more it is used, the greater the
benefit to the system (i.e., systems so structured have positive
feedback loops that increase their health and resilience).

Directionality: market incentives structured to encourage
positive changes in stakeholder behavior (i.e., healthy systems are
those in which influential actors enhance positive characteristics and
align their actions with the systems’ fundamental goals).

Watch a video of a presentation regarding the report here,
and read here
a column with overview of the report’s key findings.

The Investor Responsibility Research Center Institute is a
nonprofit research organization that funds academic and practitioner
research enabling investors, policymakers, and other stakeholders to
make data-driven decisions. IRRCi research covers a wide range of topics
of interest to investors, is objective, unbiased, and disseminated
widely. More information is available at https://irrcinstitute.org

The Investment Integration Project helps institutional
investors understand the feedback loops between their investments and
the planet’s overarching systems – be they environmental, societal or
financial – that make profitable investment opportunities possible. Once
this relationship is understood, TIIP provides investors with the tools
to help manage the impacts of their investment policies and practices on
these systems. More information is available at http://tiiproject.com